"Letters of Intent, legally, are the worst of all worlds. Writing a letter of intent is not to be taken lightly. In law, you either have a contract or you don't. LOI's are the legal equivalent of "almost pregnant." Letters of Intent emphatically state that. They state that they are not formal agreements, and then often proceed to set forth agreed terms of the proposed transaction. Given this paradox, if the deal goes sour, one party can argue [in court] that those agreed_upon points were, in fact, agreed upon _ or, in fact, a binding contract. And, in some cases, furthermore, that the party relied on the LOI and has monetary damages based on such reliance."
In fact, some experts have called the LOI a document whose use is primarily advocated or promoted only by amateurs and marginal dealers or "joker_broker" types in the crude trade business, especially the overzealous sellers' agents and brokers in a desperate hurry to land some buyers. Mr. Ziad K. Abdelnour, President & CEO of Blackhawk Partners, Inc, a New York_based advisory firm to traders and suppliers of metals, minerals and crude oil commodities, calls the LOI document something that is primarily "used out on the Internet by inexperienced traders," and by "inexperienced 'intermediary seller' who is claiming to be the supplier."